Today, our editorial was published in the Lexington Herald Leader. Here is the unedited version:
Public Golf in Peril
A recent Herald-Leader editorial opined that public golf in Lexington is in peril. Unfortunately for readers, the writer had no real understanding of the current circumstances of Lexington's golf operations.
The peril Lexington-owned golf faces is not the transparency and accountability demanded by public-interest groups like the Kentucky Club for Growth, but a crisis of leadership from Lexington's elected officials.
The city owns six golf courses throughout Fayette County. This year, the budget expects citizens of Lexington to pay approximately $2.3 million in personnel costs, $500,000 in costs of goods, $1.3 million in operational costs and (a generously low estimate of) $200,000 in debt service to maintain the six courses. This sum of over $4.3 million dollars does not fully reflect the cost, not accounting for things like lost property taxes and services such as insurance, legal counsel, marketing, or auditing.
In terms of revenue, golfers in Lexington paid about $3.4 million dollars to play on Lexington's courses in 2009, a sum the city will have been lucky to reach in 2010. Netted against the $4.3 million in expenses, the result is an annual deficit of nearly $1 million. This deficit is more than the city's budget for special programs, which includes holiday events, festivals and arts funding.
Very few cities would tolerate such losses. A management audit of the city's operations in 2007 by Mayor Newberry showed that most cities that operate golf courses create positive revenues that are used to pay for other parks services.
To look at it another way, mayoral candidate Jim Gray's "Fresh Start for Lexington" proposal suggests comparing Lexington to benchmark cities like Madison, Wisconsin and Ann Arbor, Michigan. Ann Arbor is privatizing one of its two golf courses in an effort to stem annual losses. Madison operates its four golf courses as an 'enterprise' with an annual budget of $0, aiming for self-sufficient operation (although they've never quite succeeded, bailing out the fund in annual $150,000 installments).
By any comparison, Lexington is hemorrhaging tax dollars to pay for its golf ownership.
The cause of Lexington's loss is fundamental: the supply exceeds the demand. This was apparent in 2008 when Aaron McDowell, the head pro at Lexington's Tate's Creek Course told the Herald-Leader that "I just think there's a lot of golf courses in the area and not enough people to play on them."
As Mr. McDowell pointed out, daily-fee golf is no longer a scarce activity. In addition to the six courses Lexington owns, there are over 20 additional publically-accessible courses in Fayette and surrounding counties. From the affordable High Point course in Nicholasville to the acclaimed Old Silo in Mt Sterling, a variety of privately-operated greens are within a short drive.
The city's $1 million deficit also makes it difficult to afford the investments necessary to offer a high-quality, competitive product. Instead of closing lesser-used facilities and using funds to invest and upgrade others, Lexington has the same courses with the same layout, regardless of the experience today's golfer is looking for.
When Lexington does want to invest in golf, the deficit means that improvements must be paid for entirely by taxpayers, not golfers. This year, taxpayers will foot a new $440,000 bond to purchase new golf carts.
While Lexington's golf courses are routinely bailed out of million dollar losses, the entrepreneurs and employers who operate golf businesses do not have that luxury. They must compete for customers with an operation that can lose money regularly but still survive. Instead of constantly improving, they are forced to cut corners and forgo improvements in order to compete with Lexington's artificially low prices.
Lexington's losses degrade the golf experience in the entire region.
Instead of maintaining the status quo of losing money, Lexington deserves an alternative.
The Council should support changes that allow Lexington golf to be a positive contributor to the golf experience in the Bluegrass. Whether that means realigning some courses, securing a private operator or simply operating as a self-sufficient enterprise, the goal should be eliminating losses to the taxpayer and creating a product that attracts golfers to Lexington.
Lexington and nearby courses should partner to promote Bluegrass golf as a destination experience. Just as the Bourbon Trail links together a signature product as a destination, regional daily-fee operations should work together to create a Bluegrass Golf Trail.
Councilman Jay McChord should be commended for his efforts to understand why Lexington's golf continues to suffer such a financial loss. He is beginning to ask questions about what a better future for golf might look like. Just a little leadership could start the transition from decline to stability, and create a better situation for golfers and taxpayers alike.